Nigeria: oil privatisation call exposes election divide

Nigeria’s state-owned refinery in Kaduna, a rusted hulk set on about three square kilometres on the parched outskirts of the northern city, has the capacity to process 110,000 barrels of oil a day. Last year it processed virtually nothing. The other three state-owned refineries – in the oil-rich Niger Delta region in the south of the country – did not do much better. In the year to October, the refineries operated at barely 11 per cent of their capacity of 445,000 barrels a day. In October itself, none of the refineries processed any crude, and they operated at a combined loss of $3om.

The decrepitude of the refineries in Africa’s largest crude producer is a reflection of the sorry state of an oil and gas sector starved of investment, but also a reminder of the country’s sluggish crude-driven economy. Oil still accounts for as much as 56 per cent of state revenues. The two main candidates vying to lead Africa’s most populous nation after elections this weekend offer very different choices for reforming this vital industry, between public or private sector-led development. It highlights a continuing debate in the country for which the term “kleptocracy” was coined in the 1960s over whether corruption is the price Nigeria must pay for growth.

For the incumbent, President Muhammadu Buhari, the issue is personal. He built some of the state refineries as oil minister in the 1970s, and his approach reflects his past as a military dictator: his focus is state-led growth and his plan is to form public-private partnerships to revive the refineries.